So what exactly have they put in the water in Burlington, Massachusetts? Only four months since the promising-looking acquisition of Rivermine, the Telecoms Expense Management provider, Emptoris are at it again.

They've just announced the acquisition of Xcitec, a Munich-based provider of supplier information management (SIM) software and solutions. While it doesn't have the sheer scale of the Rivermine deal, as an acquisition it is at least as strategically important in terms of the overall vision of where Emptoris are going (and part of that remains, we suspect, an IPO or flotation of some sort within 18 months).

The deal is not a huge surprise; Emptoris flagged their vision at their recent Barcelona Empower event, and as we wrote here, it was clear that they were moving towards having ‘the supplier’ at the centre of their product strategy. That sort of suggested that SIM was going to be key, and as their product range appeared to have a bit of a gap there, it didn’t take Sherlock Holmes to predict something like this was coming!

The terms of the deal haven’t been disclosed, but Xcitec have 90 staff, split fairly evenly between Germany and a development centre in Belarus; they’re privately owned, formed in 1999, the same year as Emptoris, coincidentally. They’ve never needed third party investment, so (back to Sherlock Holmes) we can probably assume they're profitable with annual revenues of around 6-8 million euros.

I haven’t had any real experience of Xcitec other than coming across their name in Spend Matters US posts, and that’s perhaps not surprising as they are very Germany focused. While their client base is very blue chip – a "36% market share among DAX listed companies" – they have only really sold to German-speaking companies, with the odd hybrid like Vodafone thrown in. Most (80%) of their deployments are behind the firewall, although that is gradually changing; that may reflect German caution rather than a deliberate Xcitec approach.

So given their size, this isn’t a big revenue play from Emptoris - that would be down at criterion number 3 I suspect when the business case was put to the Board. At the top is the opportunity to acquire a strong ready-made product set that fills a fairly significant gap in the Emptoris product vision. The opportunity to leverage new sales into the two firms’ client bases would be attraction number 2 – there is minimal overlap, and there’s a good chance Emptoris clients will look favourably on the Xcitec product offering, and vice versa.

What could possibly go wrong? My only note of caution would be cultural, and it is only speculation as I don’t know the Xcitec people or culture. But a firm that has only sold into German speakers and largely Germany itself may not be quite as simple a cultural fit* as, say, Rivermine and Emptoris appear to be. Care will be needed in managing the integration, handling the cross selling opportunities and the people side of things. But it is not as if Emptoris is ignorant of this; half their revenues come from Europe, so I’m sure their top people this side of the pond will be aware of the issues and sensitivities, and look to handle them properly.

We’ll look in more detail at that Xcitec product offering later, but our first thought is that this is a strong acquisition from Emptoris. It should benefit their clients, and there appears little downside for Xcitec customers – the team is staying and the CEO of Xcitec is taking a senior role in Emptoris. And it positions Emptoris right in the top tier of providers offering a very broad range of sourcing and supplier management tools, set within a clear overall strategic vision for themselves and their clients.

* I’ll tell you a funny story one day about when I introduced my US colleague to the CFO of a German company….it didn't go well…

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